Background.
Every year, since 1990, UN releases five indices : the Human Development Index (HDI), the Inequality-Adjusted Human Development Index (IHDI), the Gender Development Index (GDI), the Gender Inequality Index (GII), and the Multidimensional Poverty Index (MPI).
The latest report came 4 months back in which India has been ranked 131 out of 189 Nations, that have been divided into 4 categories; Very High human Development(VHD , Ranked 1-66), High human Development(HHD Ranked 67- 119) , Medium(MHD Ranked 120-156) and Low(LHD, Ranked157-189). Out of 189 nations, India ranks at 131, Bangladesh ranked at the 133rd position, while Pakistan stood at 154th place and Srilanka, our another neighbor is ranked way ahead of us amongst High Human Devp Category.
India although figures in MHD category, However, on many indicators it finds itself worse than the nations placed in LHD Cat.
Its almost been more than 4 months since the report has been announced but a Politicised society that has the time to discuss all nonsense, petty political issues surprisingly has no concern for matters that impact their own lives i.e. analysing the HDI.
We have time to keep fighting and arguing about the worth of various Political leaders, but have no time to critically examine the report and analyse what needs to be done?
What is this Index All About ?
This Index is a reflection of our wellbeing. Because it takes into account broadly; Life expectancy, Education levels – both primary and higher, Gross National income and Per capita income levels. At micro level it takes into account factors like Number of Physicians per thousand people, Number of hospital beds per ten thousand people, sanitation and safe drinking water availability etc.
If we look at the brighter side then we have gradually in a span of last 30 years moved from Lower bracket of Medium to higher bracket of MHD i.e. from 141 to 131, and, our human development growth has been meteoric since 1990s .i.e post economic reforms almost 68%. So, economic reforms, liberalization, FDI has helped the nation and the socialistic model of previous Govts did not.
So, the years from 2004-2014 whereby we once again fell back to socialistic era did not either help us. The need for schemes like MNREGA and Food security bill vindicate my view point.
But when we look deeper we find that although post reforms in 1990s there was a meteoric improvement but thereafter may be since 2008, we have stagnated on all indicators like life expectancy, areas of schooling, per capita income and in the area of poverty alleviation, despite the tall claims made.
Thereafter, the reforms like GST, Demonetisation, RERA and so on also had a temporary impact on the Economy.
Lets not make excuses because, countries like Brazil and Argentina which are as big as India, and Vietnam and Korea ravaged by war have always been way ahead of us, right from 90s.
This tells us about the ineffectiveness of our State Govts as well as the Central Govts.
Few Salient Aspects of the Report.
The data is so comprehensive, that it would take pages to analyse it. As a result, I am taking a few salient aspects. All the Countries that are Categorised in VHHD and HHD category like US, Norway, Argentina, UK ( total 66 countries) and Brazil(HHD) etc besides having low MPI ( Multi dimensional poverty) they have few things common ;
One, Hardly 2-3 % of their population is involved in agriculture .
Two, Almost 70% population is employed in service sector. Whereas, in HHD category; Turkey, Iran, Brazil, (total 53 countries ) the percentage is 10-20% and 60% in agriculture and service sect respectively,
On the other hand in countries with medium and low development, the percentage of population dependent on agriculture rises to whopping 50% and above, unsurprisingly, India has almost 55% of its population dependent in agricultural sector and hardly 27 % of its population in service sector.
Three. Brazil and China spend approx. 1.6% and 2.2%of GDP on R&D whereas India spends barely 0.6% of GDP .
Four. Brazil, Argentina have approx 65% and 66% skilled labour force respectively, whereas India has barely 22% labour force is skilled.
Five. Brazil, Srilanka, Argentina have provided electrification to its 100% rural population, whereas in India we are still languishing at 92% and that too the quality of power provided will be awful and it will be available only till the Panchayat office.
On parameters like Gender Development Index of women India is worse than even Bangladesh and Nepal.
All this is an indication that we are far far behind.
Secondly, When a nation progresses, less and less people are required to produce food for the entire country, as the yield/ acre increases.
Ostensibly, as the population dependent on agriculture gets reduced the employment in service sector increases proportionately.
This, in my view, clearly indicates the direction in which the Nation has to move. Although, the services sector has contributed almost 55% - 65% to the GDP and has in last few years received highest FDI but there is still a long way to go. Because, although it showed promise and growth since 1999/2000 onwards but then it slowed down from 12 % to mere 6 % in 2010 then to 9.2% fastest in the world but with the lowest share of services employment (28 percent in 2014). Thereafter declined because of the pandemic.
The reason is that this sector is intricately linked to the growth in Industrial sector ; auto sect, auto components, engineering, infrastructure, power, ports, civil aviation, hospitality, tourism etc. and which is linked to global factors as well as Govt policies.
And all these sectors were adversely impacted by reforms brought by Govt ; Demonetization, GST, RERA and now because of pandemic.
The Industrial growth which was approx 6% in 2000 increased gradually year on year basis reaching its peak to almost 12% in 2007 but since then petered down drastically from 2010 onwards and then reached abysmally low levels to negative growth in 2020 because of pandemic and now once again showing signs of resurgence.
In agricultural sector the growth has been like a sine wave ranging from 5% to .09, 0.81, 8.60, 5.02, 1.42, 4.71 in 2008 to 2014. Clearly showing that there are some extraneous factors affecting agricultural growth year to year.
Now let us have a look at various countries that have progressed leaps and bounds despite being bigger than us in size and are a vibrant democracy as ours and also had similar experiences. To my mind comes Korea, Brazil and Argentina, I am deliberately leaving South East Asian countries, as we all know about their growth story and many of our countrymen fond of giving excuses will say that they are smaller in size. But Indonesia, Argentina and Brazil are bigger than us and are ranked 107, 46 and 84 respectively, way ahead of us.
No wonder the cumulative impact of all the indicators mentioned above has improved the earning capacity of people in Argentina and Brazil - they have hardly 4-7% population earning 2$ or less/ day whereas India has almost 55%.
In 2011 we had almost 53% population residing in multidimensional poverty, whereas Brazil had just 37%. And in 2019 it has merely 0.9% population and India still has almost 9 % in severe multidimensional poverty and another 19% nearing multidimensional poverty, so in all these years i.e from 2011 onwards there has improvement has been tardy.
So, when India since 1990, might have jumped in HDI ranking, but for last many years it has remained stagnated 130-131.
Two, It has also not been able to overcome its problem of poverty, that too when during this period the so called benefactors of poor and deprived, launched initiatives like MNREGA.
What Needs to be Done.
This stagnation can only be stopped if we reduce the percentage of population dependent on agriculture Phase wise to the level of High Development category countries i.e. 20-30% and this can happen if we are able to upgrade THE SKILLS of our people and increase the percentage of population in services sect to almost 60% and that can only happen if we also at the same time push ourselves and become a manufacturing hub.
In order to achieve the above, it is essential that Govt takes steps to not only increase budgetary allocation in agriculture but also make a qualitative difference in increasing the yield/ acre. That can happen by bringing in technology in this sector and much needed reforms. May be Agriculture be treated as an Industry and comes under Industry act ( Food for thought).
However, any improvement in manufacturing and service sector is dependent on our ability to attract Foreign investment and that is directly linked to Business environment.
Our position in EASE TO DO BUSINESS had also stagnated around 140-145 for many years. However, the improvement in our Ranking in EASE TO DO BUSINESS in last 6 years by 82 positions ; from 145 to now 63 indicates that the Govt ; both Central as well as many State Govts have taken concerted measures to improve the business environment in their respective states.
The Parameters taken into account while working out this Index are Construction permits, trading across borders, starting a business, getting credit, getting electricity and enforcing contracts.
Reforms like GST, RERA, Opening up of financial markets, and E Governance have helped India to show improvement in all the Parameters(almost 100%) except one that is ; CONTRACT ENFORCEMENT, may be because the State administrative machinery and the judiciary have shown little interest in reforming themselves.
In a country where Beauraucracy still having the hangover of socialistic era, State Govts not interested in the reforms, it is an uphill task for the Central Govt to move things ahead on this EASE TO DO BUSINESS front.
Once doing business in India becomes easier, we would have more entrepreneurs, more business establishments, more FDIs, there would be more jobs, gradually we will have better skilled people, and gradually we will also be able to move towards HIGH HUAMN RESURCE INDEX CATEGORY.
But for all that to happen we need to have Govts both at the Center and at State level who can think beyond giving doles ; Free laptops, free washing machines …. , capable of taking reforms process ahead, and are able to take tough decisions.
What was done in 1990s was the primary level reforms, that catapulted India’s economic growth but at the same time, We must understand that Reforms are a continuous process and not a One time event and also that without State Govts playing positive role, Center alone cannot take Bharat ahead.
Note ; the Data is from UN and RBI’s site.
Author. Col N Bhatnagar is an alumnus of NDA, Prestigious Def Services Staff College and XLRI. He served in Indian army as an Infantry Officer in all parts of the country and also in Srilanka and has also worked with Reputed Companies - Power, Hospitality and Health Care sector . He has also worked as a National Assesssor of CII for its CII-EXIM Bank Award and HR Excellence award. He has also authored Three Books.
Disclaimer. The views expressed are of Author.